Skip to comments.Behind The Real Size of the Bailout (Mother Jones says its $14 trillion)
Posted on 01/04/2010 11:13:58 AM PST by E. Pluribus Unum
A guide to the abbreviations, acronyms, and obscure programs that make up the $14 trillion federal bailout of Wall Street
The price tag for the Wall Street bailout is often put at $700 billionthe size of the Troubled Assets Relief Program. But TARP is just the best known program in an array of more than 30 overseen by Treasury Department and Federal Reserve that have paid out or put aside money to bail out financial firms and inject money into the markets. To get a sense of the size of the real $14 trillion bailout, see our chart here. Below, a guide to the pieces of the puzzle:
Treasury Department bailout programs
Money Market Mutual Fund: In September 2008, the Treasury announced that it would insure the holdings of publicly offered money market mutual funds. According to the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), these guarantees could have potentially cost the federal government more than $3 trillion [PDF].
Public-Private Investment Fund: This joint Treasury-Federal Reserve program bought toxic assets from banks and brokeragesas much as $5 billion of assets per firm. According to SIGTARP, the government's potential exposure from the PPIF is between $500 million and $1 trillion [PDF].
TARP: As part of the Troubled Asset Relief Program, the Treasury has made loans to or investments more than 750 banks and financial institutions. $650 billion has been paid out (not including HAMP; see below). As of December 21, 2009, $117.5 billion of that has been repaid.
Government-sponsored enterprise (GSE) stock purchase: The Treasury has bought $200 million in preferred stock from Fannie Mae and another $200 million from Freddie Mac [PDF] to show that they "will remain viable entities critical to the functioning of the housing and mortgage markets."
GSE mortgage-backed securities purchase: Under the Housing and Economic Recovery Act of 2008, the Treasury may buy mortgage-backed securities from Fannie Mae and Freddie Mac. According to SIGTARP, these purchases could cost as much as $314 billion [PDF].
Citigroup asset guarantee: In this joint Treasury, Federal Reserve, and FDIC program, the government agreed to cover potential losses to a Citigroup asset pool worth $301 billion [PDF].
T-bill auctions to fund the Fed: In November 2008, the Treasury announced that it would borrow $260 billion to fund the Supplementary Financing Program, whose proceeds were deposited with the Federal Reserve.
TARP overpayment: This June, the Congressional Budget Office estimated that the federal government would lose $159 billion from its TARP loans and investments due to changes in their market value. (So far, Treasury has earned $14.4 billion in dividends from TARP.)
Bank of America asset guarantee: In this joint Treasury, Federal Reserve, and FDIC program, the government agreed to cover potential losses to a Bank of America asset pool worth $118 billion. Bank of America has withdrawn from the program and has paid the government $425 million [PDF] in compensation.
Potential international fund liabilities: In April, the United States committed up to $100 billion to fund the International Monetary Fund's lending and ensure that it "has adequate resources to play its central role in resolving and preventing the spread of international economic and financial crises."
HAMP: The Home Affordable Modification Program offers financial incentives to lenders to modify home loans. $75 billion in federal funds has been committed; $50 billion of that comes from TARP is set aside to modify mortgages not owned or guaranteed by Frannie Mae, Freddie Mac or other government-sponsored entities.
Treasury exchange stabilization fund: A temporary program to insure the holdings of publicly offered money market mutual funds.
GSE credit facility program: Additional credit made available to Fannie Mae and Freddie Mac. Expires December 31, 2009.
Federal Reserve bailout programs
Commercial Paper Funding Facility: With the support from the Treasury, the Fed established the CPFF in October 2008 to increase the availability of short-term debt (commercial paper) funding. Up to $1.8 trillion [PDF] was earmarked for the program.
Mortgage-backed securities purchase: In 2009, the Fed earmarked up to $1.25 trillion to buy investments based on home loans.
Term Asset-Backed Securities Loan Facility: TALF provides financing to investors who are buying asset-backed securities. In February 2009, the Fed and Treasury announced an expansion of the program to generate up to $1 trillion in new lending.
Foreign Central Bank Currency Liquidity Swaps: The Fed has provided $755 billion [PDF] for currency liquidity swaps with foreign central banks.
Money Market Investor Funding Facility: The MMIF was established in October 2008 to provide loans for investors buying certificates of deposit and commercial paper. According to SIGTARP, $600 billion [PDF] was allocated for the program.
Treasury Purchase Program: In March 2009, the Fed was authorized to purchase up to $300 billion of treasury securities.
GSE Program: In March 2009, the Fed increased its purchases of debt from government-sponsored enterprises (Fannie Mae and Freddy Mac) from $100 billion to $200 billion.
Primary Dealer Credit Facility: The PDCF provides overnight loans to primary dealers (financial firms that can engage in direct transactions with the federal government). The Fed allocated $147.7 billion [PDF] for it in 2009.
ABCP MMMF liquidity facility: The Asset-Backed Commercial Paper (ABCP) Money Market Mutual Fund (MMMF) Liquidity Facility (whew!) provides loans to financial institutions purchasing commercial paper from money market mutual funds. According to SIGTARP, the Fed allocated $145.9 billion for the program in 2009.
JPMorgan Chase/Lehman Brothers: In September 2008, the Fed gave JPMorgan Chase $148 billion in help the near-bankrupt Lehman Brothers.
Open Market Operations: In September 2008, the Fed injected $125 billion into the market by purchasing securities and repurchase agreements, or repos, in which primary dealers borrow cash from the fed.
Tri-Party Repurchase Agreements: The Fed provided $124.6 billion [PDF] for this type of repo in 2009.
Primary Credit: The Fed provided $112 billion [PDF] to offer loans at a discounted rate to eligible institutions in 2009.
Temporary Reserves: Between August and September 2007, the Fed made $93 billion of temporary reserves available for loans to financial firms.
Single-Tranche Repurchase Agreements: In 2009, the Fed offered a total of $80 billion for short-term loans to holders of mortgage-backed securities.
Term Auction Facility: Under TAF, the Fed auctions short-term loans to financial institutions. The amount of loans offered has varied widely; between December 2009 and January 2010, $75 billion in loans will be available.
AIG preferred stock interests, credit, and loan: The Fed provided $53 billion to the struggling AIG in various forms between 2008 and 2009.
AIG Securities Lending Facility: In October 2008, the Fed authorized the Federal Reserve Bank of New York to borrow up to $37.8 billion in securities from AIG.
Maiden Lane II and III (AIG): In 2008, the Fed authorized its New York branch to form three limited liability companies: Maiden Lane, Maiden Lane II, and Maiden Lane III. It provided $52.5 billion to Maiden Lane II and III to assist AIG.
Maiden Lane I (Bear Stearns): The Fed provided $29.8 billion to Maiden Lane I to acquire Bear Stearns' assets and facilitate its merger with JPMorgan Chase.
TSLF: The Term Securities Lending Facility offers Treasury collateral to the Federal Reserve Bank of New York so it can auction weekly loans to financial institutions. $25 billion in loans will be available between November 2009 and January 2010.
TOP: The Term Securities Lending Facility Options Program allowed primary dealers to get TSLF loans in exchange for collateral. At the time of the program's termination in June 2009, $50 billion in loans had been offered.
Expansion of system open market account securities lending: In July 2009, the Fed increased its limit for loans of securities to brokers from $3 billion to $5 billion, for a total of $36 billion [PDF] in new lending.
JPMC/Bear Stearns Loan: The Fed provided
Mother Jones is a leftist publication, but does good research. It’s a good resource.
The real cost of the bailout is the sovereignty of the United States.
Wonder where they got the information lol it’s been out for a while
didn’t they endorse this guy for prez?
if so, then they should just quit carping and take what they wanted.
Well, it dovetails with something I read a while back— somewhere, in those thousands of links I maintain, a think tank added all of Duh!1’s proposed spending up and came up with 14.7 trillion dollars.
Of course, if it’s like most gooberment figures, you have to double or triple it to get near the final cost...
What comes after trillions?
>>What comes after trillions?
The part of the moral tale where, having eaten all the low hanging fruit and fat stupid birds, the natives then eat each other...?
CASE IN POINT Obama tapped VP Joe Biden to "allocate" the stimulus $$trillions. Biden's family was involved with Texas financier H. Allen Stanford, now charged with an $8 billion offshore fraud, the WSJ said. The Bidens $50 million fund was jointly branded between the Bidens' Paradigm Global Advisors LLC and a Stanford Financial Group entity, and was known as the Paradigm Stanford Capital Management Core Alternative Fund, the paper said. Stanford-related companies marketed the fund to global investors and also invested about $2.7 million of their own money in the fund, the paper said, citing a lawyer for Paradigm.......... Paradigm Global Advisors is owned through a holding company by the VP's son, Hunter, and Joe Biden's brother, James, according to newspapers.
CASE IN POINT How can this be legal? A jaw-dropping policy the White House released late on a May Saturday afternoon........hoping we would not notice. "Following OMBs review, the Obama Administration has decided to make a number of changes to the rules that we think make them even tougher on special interests and more focused on merits-based decision making. First, we will expand the restriction on oral communications to cover all persons, not just federally registered lobbyists. For the first time, we will reach contacts not only by registered lobbyists but also by unregistered ones, as well as anyone else exerting influence on the process. We concluded this was necessary under the unique circumstances of the stimulus program."
CASE IN POINT On June 9, 2009 Obama called a press conference to announce, "Several financial institutions are set to pay back $68B to taxpayers." Reasonable people (taxpayers) assumed that any money or profit would be returned to the general funds from whence it had come .......in order to pay down the debt. The truth, however, is that the money returned by the banks is finding new life as part of what amounts to a Treasury Dept-controlled slush fund.
CASE IN POINT Obama's obsessive reach for "healthcare reform" confirms reform is another trillion dollar govt slush fund for hand-picked insiders.......ACORN, Soros, SEIU. Keep in mind---COS Rahm Emanuel and his brother Dr Zeke--are in charge of the healthcare trillions.
Some speculate that a large percent are valueless. Still Fed+Gov seems intent on seeing that no derrivative fails!
Did you that Dollar you saved in a CD a day before Obama was elected, will soon be worth only 7 cents?
Why? Dilution. The Treasury and Fed, in cahoots with some inner circle intermediary traders are busy printing money from nothing. Federal Spending in the Bush years ran around 1 Trillion per year. Since Obama was elected that spent amount must now take in the $14 TRILLION cost of the financial sector bailout according to Ma Jones.
A 14+ to 1 dilution. Your dollar in cash or equivalent has a value at least 1/14th of what it was. That’s about 7 cents status quo ante.
Welcome to the new ObamaMonopoly rules of life! Where you wealth is measured ONLY by how close you stand to the ObamaStash.
AKA: Zimbabwe Redux.
It’s actually worse. But we count stink bombs. They all just merge together into one big stink after the first few.
Typo: “But why count stink bombs”
MoJo finally working?
So I take it Mother Jones is happy about this? It does hasten the rise of totalitarianism in the US. I presume they are all for that?